Services help avoid big fees to change flights

Companies offering ways to hold, lock in rates at cheaper cost

Such is the state of air travel these days that even the fees have fees.

It is a ritual that will most likely sound familiar to many holiday travelers: Your plans suddenly change, and a flight must be switched. Soon you are paying a flight-change fee of $200 or so. But so extreme have these airline change fees become that a cottage industry has emerged offering a way for travelers to avoid the charge - for a fee, of course. And even the airlines are getting in on the act.

It is part of what has become a booming business for the carriers. Altogether, change fees generated $2.98 billion for the domestic airlines in 2014, triple the amount in 2007, when most fees were introduced, according to the Department of Transportation.

The figure is on pace to be even higher in 2015. And it does not even include revenue from those travelers who simply decide to leave a flight behind and book a new ticket.

Now, two companies - Options Away, founded by a former currency trader, and Flyr, a San Francisco-based data science company - see the rise in change fees as an opportunity. They offer ways to hold or lock in rates for up to three weeks. It costs anywhere from a few dollars to upward of $50.

Heidi Brown, who started Options Away in 2012, said her concept of the company came from the queasy feeling she would get every time she bought a plane ticket and worried that her plans might change. She made it her mission to relieve the financial stress caused by change fees.

"I know why people buy options: because of uncertainty," Brown said. "I thought, 'I would be willing to put down $10 if it bought me a few days.'"

Flyr introduced a similar service, FareKeep, this summer.

The services work like this: A traveler pays a nonrefundable fee to Flyr or Options Away, which holds an airfare for the specified time but does not actually purchase a ticket until the traveler's plans are completed. If a flight appears at risk of selling out during the option period, Flyr says it will work with the client to find similar itineraries, while Options Away says it monitors flights actively enough to avoid those risks (and will not offer holds on flights that appear most in danger of selling out).

If the client decides to travel on the specified date, he or she simply completes the ticket purchase. If, however, the itinerary must change or be canceled altogether, Flyr or Options Away keeps only the fee.

It is an option that Scott Brunner, a loyal Delta flier, could have used. He booked flights on Nov. 15 for him and his daughter to travel around Christmastime, only to realize two days later that he had mistakenly switched the destination and arrival airports. So he called Delta to make the change.

"I thought it would be simple," Brunner said. "Indeed, the customer service rep made the change immediately."

Then Delta dropped the hammer. "That's going to be $150," he was informed.

Asked about the airline's policies, a Delta spokesman referred to the company's ticket rules, which are listed on its website.

No consumer benefit

Options Away now has partnerships with Expedia and American Airlines. Like other airlines, American is trying to offer customers more peace of mind, for a price.

United offers a fare-locking product, for $7, that allows travelers to hold a nonrefundable airfare for three days ($9 for seven days). Other airlines, like Allegiant, encourage travelers to spend more for so-called flex packages that enable them to make trip changes at no extra cost.

It is a market that was hard to imagine a decade ago, before the ancillary add-on charges for seemingly everything except ice cubes became the industry standard, according to Tom Bacon, an airline industry consultant and strategist. Only Southwest Airlines, which distinguishes itself among major airlines by largely shunning fees, does not charge to switch flights.

Brown had to laugh at the incongruity of her own business, which formed in response to the inflexibility of the airlines but now thrives partly because of it.

"There's not going to be any quote from me saying I hate airline change fees," she said.

But others don't see much benefit for consumers, and some advocacy groups, as well as lawmakers, are pushing back.

"They're just adding confusion to an already confusing process," said Charlie Leocha, chairman of Travelers United, an advocacy group for travelers. Leocha's group has started to put pressure on policymakers in Washington.

In August, ranking members of the Senate Committee on Commerce, Science and Transportation recommended that airline change fees be "limited to a reasonable amount tied to lead time before departure and a maximum percentage of the original fare paid." Leocha said he was hopeful that it would be included in transportation legislation to be voted on in March.

No consumer benefit

To Leocha, the current federal restrictions on change fees - tickets booked at least seven days in advance must be fully refundable within 24 hours - are too short for many travelers. In many cases, he said, travelers choose simply to let the flight leave without them rather than pay the extra $200 if the original fare was relatively inexpensive.

"It's beyond ridiculous," Leocha said. "And there is no justification for it."

American Airlines and United Airlines referred a request for comment to Airlines for America, a trade group. A spokeswoman, Melanie Hinton, said that airfare structures and cancellation fees represented the opportunity cost that airlines sought to recover.

"The airline has to take into consideration both the ability to sell his original seat and calculate the impact and risk of potential revenue loss for that new seat," she wrote in an email.

Robert W. Mann Jr., an airline industry analyst, agrees that opportunity costs do exist for airlines, even today, when tickets are in demand and the likelihood of reselling seats that may have been changed or canceled is strong.

But he challenged the economics of charging a flat fee of $200, rather than a sliding scale, which is used by only a few airlines, like JetBlue.

Quinn Hirsch, 21, a graduate student in Boston, used Twitter to plead with JetBlue to allow her to push up her flight home to Chicago ahead of a winter storm in November. But the airline declined to waive its $75 change fee, and wanted Hirsch to pay the $130 difference between the two flights. She decided not to pay the surcharges, and then her flight wound up being canceled.

A JetBlue official said the company offered several fare options to travelers, including one called BlueFlex, which comes with no change fees or cancellation charges.

Back in Atlanta, all Brunner was asking for was some leniency.

"The change I asked them to make costs Delta nothing but about five minutes worth of a customer service rep's time," Brunner said. "The big sticking point to me is the customer relationship. I'm a loyal customer, dang it, treat me like one."